Best’s News & Research Service - December 17, 2014 10:09 AM (EST)
A.M. Best Assigns Ratings to Sveriges Ångfartygs Assurans Förening (The Swedish Club)
London //BestWire// - A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to Sveriges Ångfartygs Assurans Förening (The Swedish Club) (the Club) (Sweden). The outlook assigned to both ratings is stable.
The Club is expected to maintain excellent risk-adjusted capitalisation throughout 2015. As a mutual association, the Club accepts some volatility in underwriting performance but, with five years of profitable operations out of the last six, free reserves have increased from USD 105.9 million at year-end 2008 to USD 164.8 million at year-end 2013. Whilst recognising that large claims or substantial investment losses could have a significant impact on future operating performance, A.M. Best expects risk-adjusted capitalisation to remain supportive of the ratings.
The Club reported a good profit for 2013 of USD 17.0 million before tax and transfer to safety reserve (2012: USD 9.1 million), reflecting a strong technical result and solid investment earnings. In 2014, a good pre-tax profit is again expected, albeit lower than in 2013, with a reduced but still positive technical income and an improved level of investment income. The Club has a strong underwriting record with a five-year (2009-2013) average combined ratio of 99.2%, in spite of the combined ratio being around 110% for 2011 and 2012. Investment earnings also have been subject to some volatility, due in part to the high proportion of equity investments. The Club's investment strategy has a target asset allocation of 20% equities.
The Club has a strong business profile as a leading and diversified mutual marine insurance company and a member of the International Group of P&I Clubs. Having been established initially to write hull and machinery insurance for owners of steamships, the Swedish Club continues to insure over 2,400 ships on that basis with an aggregate gross tonnage of 90 million tons. On the P&I side, the Club provides liability insurance in relation to over 1,000 ships with an aggregate gross tonnage of 40 million tons. Both these lines of business are highly diversified in terms of type of vessel and geographic area of ownership.
Following the assignment of the current ratings, a positive rating action is considered unlikely in the next two years. Conversely, unexpectedly poor operating results or a material decrease in the Club's free reserves could lead to negative pressure on the ratings.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
- Catastrophe Analysis in A.M. Best Ratings
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.
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